Hammond loosens the purse strings with £3bn for Brexit
Chancellor told to spend now to show Europe that Britain is serious about walking away from talks
BRITAIN will set aside £3 billion on preparations for Brexit, including leaving the EU without a deal, Philip Hammond announced as he faced calls from Conservative Eurosceptics to spend the money now.
The Chancellor provoked Cabinet splits last month by saying that the UK should not spend money on preparing for leaving the EU without a deal until “the very last moment”.
However, he announced in his Budget that the Government is setting aside money to prepare for “all eventualities”, including leaving the EU without a deal. “No one should doubt our resolve,” he said.
Conservative MPS pointed out that the first half of the money will not be spent until next year, while the second half will not be released until 2019-20 – by which time the UK will already have left the EU.
Michael Gove, the Environment Secretary, is among Eurosceptic MPS who have repeatedly argued that Britain should invest in preparing for a no deal Brexit to show the EU that it is serious about walking away.
David Jones, a Eurosceptic Tory MP, said: “I am pleased to see the Chancellor has set aside £3billion for Brexit over the next two years.
“However, he should now actually be spending some of that money. We need to show the EU that preparations are being made and also need to give reassurance to business.”
Mr Hammond said: “We are determined to ensure that the country is prepared for every possible outcome. We have already invested almost
‘We need to show the EU that preparations are being made and also need to give reassurance to business’
£700million in Brexit preparations.
“Today I am setting aside over the next two years another £3billion.
“And I stand ready to allocate further sums if and when needed. No one should doubt our resolve.”
He concluded his Budget speech by saying that the “biggest boost” for businesses and families would be to make “early progress” to securing a deal on Brexit. However, Tory Eurosceptic MPS raised concerns after the Treasury suggested that the UK could continue to pay £3.5 billion a year after Brexit.
Jacob Rees-mogg said: “I cannot believe that those wise figures in Her Majesty’s Treasury could have made a schoolboy error of just assuming that money paid out in one year would continue indefinitely.
“This is I feel rather like spotting an error in Wisden Cricketers’ Almanack – something that it is very rare to do and indicates an occasional failing.”
The Government clarified that the Office for Budget Responsibility, the official forecaster, had included the EU spending in forecasts because it had assumed that after Brexit it would be “recycled fully into extra domestic spending.”
The OBR said that it had only been able to make “broad brush” assumptions about Brexit because the future relationship with the EU is subject to negotiations.
It said: “Given the uncertainty regarding how the government will respond to the choices and trade-offs it faces during the negotiations, we still have no meaningful basis on which to form a judgment as to their final outcome and upon which we can then condition our forecast.”
However, it did downgrade its forecasts for net migration from 185,000 in 2021 to 165,000 in 2022 on the assumption that the Government will go on to introduce tighter immigration controls.
This will still fall short of the Government’s target of cutting net migration to “tens of thousands”.
The watchdog also assumes that Brexit will result in slower import and export growth due to new frictions in trade between the UK and EU.